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ADF: Aspirational Defence Force

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COMMENTS

12 May 2011 09:53

The Defence budget is increasingly becoming a national ponzi scheme: drawing down on our strategic future to meet the political promises of our past. Australia is no longer on track to build the Defence Force outlined in Force 2030, the 2009 Defence White Paper.

There's nothing wrong with a little tightening of the Defence belt every now and then. A lean military is an efficient military. As the New Zealand Defence Force knows far better than us, reduced defence spending means you focus on what delivers capability and discard what doesn't. Across the globe, everywhere but in Pakistan and China, defence austerity is the new black.

Going or gone: Two years after Force 2030 was launched, many of its major backers have moved on.

In the US, a bipartisan commission has recommended the Pentagon cut $1 trillion (twice the current annual budget) over the next decade. The UK's defence budget will fall by 8%; 17,000 uniformed and 25,000 civilian positions will be cut, and the army will lose one in six of its deployable brigades. France has frozen defence spending at current levels.

These three countries between them account for 50% of global defence spending – which explains why annual global military expenditure is at its lowest rate of growth since 2001.

Here in Australia, the word 'Defence' hardly appeared in Treasurer Wayne Swan's budget speech, but then he didn't use the word 'cuts' very much either. Though the Defence budget is short on dollars, there's no shortage of weasel words to obfuscate exactly how the funding will be cut. Take this phrase from the Defence Portfolio Budget Statements 2011-12:

Defence will mitigate the effects of this overachievement through a range of measures designed to return the military work force to guidance. 

Translated, that means: 'We might need to fire some people next year because we didn't properly match recruitment numbers with retirement numbers'. Or this baffling word-artistry:

The Government will reprogram funding for the Defence capital investment program to better align it with Defence's strategic requirements. The reprogramming will result in savings of $1280.8m over the forward estimates, to be reprogrammed beyond the forward estimates. The reprogramming will support the Department of Defence in delivering the military capabilities set out under Force 2030, the Defence White Paper.

In everyday language this means: 'We needed to buy a new car this year to replace the old one, but we didn't buy it, and that will save you money and be good for you too'. But what if you need that new car to drive to work next year because the old one breaks down? Won't the new car cost more in future years? How can we be saving money if we're just delaying spending it?

Defence procurement is a sticky business and very few people understand how it works. But Australians understand that Asia is changing and that we need to modernise our Defence Force to meet the strategic uncertainties of the Asian century. Then Prime Minister Kevin Rudd understood that too in May 2009 when he lined up senior Defence leaders behind him on the flight deck of a warship in Sydney Harbour. In announcing the 2009 Defence White Paper, the deal between Government and Defence was simple: find $20.7 billion of savings over the next 10 years and we'll fund a $100 billion spending spree for a modernised defence force: Force 2030.

The savings called for under the Strategic Reform Program have been slow to materialise. Mark Thomson, the only person in Australia who truly understands defence budgets, has largely dismissed those SRP savings announced thus far as fanciful accounting tricks. The budget this year spruiks savings from shared services reform – that's code for consolidating duplicate HR and administrative functions. This could be the first really cost-effective reform under the SRP, and is due to be implemented in August. The Treasurer has also put Defence on notice to squeeze an additional $2.7 billion of savings in the coming four years.

But the bigger concern is the delay in spending the money allocated for new equipment necessary to build Force 2030. Defence and the Defence Material Organisation failed to spend $1.1 billion allocated for new projects this year and will hand it back to Government. Their allocation for new projects has been cut by $1.3 billion in the forthcoming year and looks set to be cut again next year. Finally, the promised 3% real annual increase on defence expenditure, necessary to pay for Force 2030, has failed to eventuate.

The equipment-purchasing schedule required to achieve Force 2030 was presumably finely calibrated with defence industry capacity. Defence is now struggling to keep up. That problem is only going to get worse thanks to a recent decision to put all minor projects (those worth $8-20 million) through the detailed two-pass approval process. That adds 105 minor projects to the existing 140 major projects waiting to be submitted to Government for approval.

This logjam suits the Gillard Government by allowing it to continually delay expenditure beyond the promised budget surplus date in 2012/13. That partly explains why, since February 2010, Government has only approved $2 billion of the $153 billion spend necessary to build Force 2030.

It's possible that the strategic assumptions behind Force 2030 have changed and that the Government envisions an entirely different Defence Force structure from that devised two years ago. That may explain why no funding has been allocated towards the enormous project to build 12 new submarines, declared in 2009 as critical for Australia's maritime strategy.

But in the absence of any public announcement, we can only hold the Government accountable to the standards it set itself in the 2009 Defence White Paper. By that measure, our defence capability is on a steady downward trajectory.

Few of the Defence leaders who stood behind Rudd championing Force 2030 are left, two years on. Defence Minister Joel Fitzgibbon was forced out within weeks, Secretary Nick Warner (not pictured) moved on, Rudd was dismissed as PM, and by June this year all of Defence's uniformed leaders will have been replaced. It's entirely possible that Force 2030 lies dead somewhere in Russell Headquarters and the public are yet to discover the rotting corpse.

Photo courtesy of the Department of Defence.

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